FIFTH AMENDMENT TO CREDIT AGREEMENT
This FIFTH AMENDMENT TO CREDIT AGREEMENT (this "AGREEMENT") is entered into
as of December 31, 1995, by and among Haggar Clothing Co., a Nevada corporation,
f/k/a Haggar Apparel Company (the "COMPANY"), Haggar Corp., a Nevada corporation
("HAGGAR"), the banks listed on the signature pages of this Agreement
(collectively, the "BANKS"), Texas Commerce Bank National Association, successor
by merger to Texas Commerce Bank, National Association, a national banking
association, individually and as agent (the "AGENT") for the Banks, and in its
capacity as funds administrator (the "FUNDS ADMINISTRATOR"), and is consented to
by Haggar and the domestic subsidiaries of the Company listed on the signature
pages of this Agreement (collectively, the "SUBSIDIARIES").
RECITALS:
WHEREAS, pursuant to that certain Credit Agreement (the "Credit Agreement")
dated as of September 14, 1992, executed by and among the Company, Haggar, the
Banks and the Funds Administrator, the Banks agreed to make advances to the
Company on certain terms and conditions set forth therein (each capitalized term
used but not defined herein shall have the meaning given to such term in the
Credit Agreement as amended); and
WHEREAS, the Credit Agreement has been amended pursuant to that certain
First Amendment to Credit Agreement (the "FIRST AMENDMENT") dated as of March
31, 1993, executed by and among the Company, Haggar, the Banks, the Agent and
the Funds Administrator, and consented to by Haggar and the Company's Domestic
Subsidiaries in existence as of such date; and
WHEREAS, the Credit Agreement has been further amended pursuant to that
certain Second Amendment to Credit Agreement (the "SECOND AMENDMENT") dated as
of April 20, 1994, executed by and among the Company, Haggar, the Banks, the
Agent and the Funds Administrator, and consented to by Haggar and the Company's
Domestic Subsidiaries in existence as of such date; and
WHEREAS, the Credit Agreement has been further amended pursuant to that
certain Third Amendment to Credit Agreement (the "THIRD AMENDMENT") dated as of
November 9, 1994, executed by and among the Company, Haggar, the Banks, the
Agent and the Funds Administrator, and consented to by Haggar and the Company's
Domestic Subsidiaries in existence as of such date; and
WHEREAS, the Credit Agreement has been further amended pursuant to that
certain Fourth Amendment to Credit Agreement (the "FOURTH AMENDMENT") dated as
of March 17, 1995, executed by and among the Company, Haggar, the Banks, the
Agent and the Funds Administrator, and consented to by Haggar and the Company's
Domestic Subsidiaries in existence as of such date; and
WHEREAS, the Company has requested that the Credit Agreement be amended to
change the ratios set forth in Sections 7.6, 7.7 and 7.9 of the Credit
Agreement, to amend the definitions of the terms "CD Margin", "Eurodollar
Margin" and "Fixed Charges" as set forth in Section 1.1 thereof; and
WHEREAS, the Agent and the Banks are agreeable to such requests under the
present circumstances.
FIFTH AMENDMENT TO CREDIT AGREEMENT PAGE 1
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and confessed, the Company, Haggar,
the Banks, the Agent and the Funds Administrator hereby agree as follows:
AGREEMENT:
1. AMENDMENTS TO DEFINITIONS. The definitions of "CD Margin" and
"Eurodollar Margin" as set forth in Section 1.1 of the Credit Agreement (as
previously amended by the First Amendment and the Fourth Amendment) are hereby
amended in their entirety to read as follows:
"CD Margin" means (a) at any time when the Funded Debt Ratio is equal to or
less than 1.50 to 1, five-eighths of one percent (5/8%) per annum, (b) at any
time when the Funded Debt Ratio is greater than 1.50 to 1 but less than or equal
to 2.00 to 1, three quarters of one percent (3/4%) per annum, (c) at any time
when the Funded Debt Ratio is greater than 2.00 to 1 but less than or equal to
2.50 to 1, seven-eighths of one percent (7/8%) per annum, (d) at any time when
the Funded Debt Ratio is greater than 2.50 to 1 but less than or equal to 3.00
to 1, one percent (1%) per annum, (e) at any time when the Funded Debt Ratio is
greater than 3.00 to 1 but less than or equal to 3.50 to 1, one and one-quarter
percent (1 1/4%) per annum, (f) at any time when the Funded Debt Ratio is
greater than 3.50 to 1 but less than or equal to 4.00 to 1, one and one-half
percent (1 1/2%) per annum, and (g) at any time when the Funded Debt Ratio is
greater than 4.00 to 1, one and five-eighths percent (1 5/8%) per annum. Each
adjustment to the previously calculated CD Margin shall be effective five (5)
Business Days following Agent's receipt of the reports to be delivered by the
Company pursuant to Subsections 6.1(a) and (b).
"Eurodollar Margin" means (a) at any time when the Funded Debt Ratio is
equal to or less than 1.50 to 1, one-half of one percent (1/2%) per annum, (b)
at any time when the Funded Debt Ratio is greater than 1.50 to 1 but less than
or equal to 2.00 to 1, five-eighths of one percent (5/8%) per annum, (c) at any
time when the Funded Debt Ratio is greater than 2.00 to 1 but less than or equal
to 2.50 to 1, three-quarters of one percent (3/4%) per annum, (d) at any time
when the Funded Debt Ratio is greater than 2.50 to 1 but less than or equal to
3.00 to 1, seven-eighths of one percent (7/8%) per annum, (e) at any time when
the Funded Debt Ratio is greater than 3.00 to 1 but less than or equal to 3.50
to 1, one and one-eighth percent (1 1/8%) per annum, (f) at any time when the
Funded Debt Ratio is greater than 3.50 to 1 but less than or equal to 4.00 to 1,
one and three-eighths percent (1 3/8%) per annum, and (g) at any time when the
Funded Debt Ratio is greater than 4.00 to 1, one and one-half percent (1 1/2%)
per annum. Each adjustment to the previously calculated Eurodollar Margin shall
be effective five (5) Business Days following Agent's receipt of the reports to
be delivered by the Company pursuant to Subsections 6.1(a) and (b).
2. AMENDMENT TO DEFINITION OF FIXED CHARGES. The definition of the term
"Fixed Charges" (as amended by the Third Amendment) is hereby amended to replace
the figure "$35,000,000" in the last line thereof with the figure "$38,000,000".
3. AMENDMENT OF SECTION 7.6. Section 7.6 of the Credit Agreement (as
amended by the Third Amendment) is hereby amended to read in its entirety as
follows:
7.6. FIXED CHARGE REQUIREMENT. Permit the ratio of Operating Cash Flow
to Fixed Charges for the prior twelve (12) months, as measured at the end of
each fiscal quarter, to be or become less than 1.25 to 1.0, or, with respect
only to the two fiscal quarters ending December 31, 1995 and March 31, 1996,
respectively, 0.9 to 1.0. In calculating the ratio of Operating Cash Flow to
Fixed Charges for the prior twelve (12) months, as measured at the end of
each fiscal quarter or at any specific point in time, the amount of any cash
payments made by the Company as Capital Expenditures in connection with the
Customer Service and Distribution Center (to the extent such expenditures in
the aggregate do not exceed $38,000,000) or the Warehouse Acquisition shall
not be included as a Fixed Charge.
FIFTH AMENDMENT TO CREDIT AGREEMENT PAGE 2
4. AMENDMENT OF SECTION 7.7. Section 7.7 of the Credit Agreement (as
amended by the Fourth Amendment) is hereby amended to read in its entirety as
follows:
7.7 FUNDED DEBT LIMITATION. Permit the Funded Debt Ratio, as measured
at the end of each fiscal quarter, to be or become greater than 4.0 to 1.0,
or, with respect only to the two fiscal quarters ending December 31, 1995
and March 31, 1996, respectively, 4.25 to 1.0.
5. AMENDMENT TO SECTION 7.9. Section 7.9 is hereby amended to read in its
entirety as follows:
7.9. INVENTORY TURN. Permit the quotient, as measured for the Company
Group on a consolidated basis at the end of each fiscal quarter, with
reference to the financial statements described in Section 6.1, of (a) the
cost of goods sold during the prior twelve (12) months divided by (b) the
Dollar amount of the cost of Inventory at the end of such fiscal quarter, to
be (if measured at a specific point in time) or become less than 2.0, or,
with respect only to the two fiscal quarters ending December 31, 1995 and
March 31, 1996, respectively, 1.9.
6. CERTIFICATES. This Agreement shall be effective as of the date first
above written when executed by all parties hereto and consented to by the
Guarantors as provided on the signature pages hereto, and upon receipt by the
Agent of the following, each in form, substance and bearing a date satisfactory
to the Agent and its counsel:
(a) A certificate of the Secretary or Assistant Secretary of the Company
and the Guarantors, respectively, certifying (i) that, except as indicated
therein, there has been no change to the articles of incorporation or bylaws
of the Company or the Guarantors since the same were furnished to the Agent
in connection with the execution of the Credit Agreement, (ii) as to the
name and title of the officers of the Company and the Guarantors and the
authority of such officers to execute this Agreement, (iii) that attached
thereto are true, correct and complete excerpts of resolutions of the Board
of Directors of the Company or the applicable Guarantor authorizing the
execution of this Agreement.
(b) A certificate, signed by the Treasurer of the Company or the Chief
Financial Officer of the Company, stating that as of the date of this
Agreement and after giving effect to this Agreement the statements set forth
in Sections 4.2(a), (b) and (g) of the Credit Agreement are true and
correct.
7. EFFECTIVENESS OF DOCUMENTS. Except as expressly modified hereby, all
terms, provisions, representations, warranties, covenants and agreements of the
Company and Haggar related to the Loans, whether contained in the Notes, the
Credit Agreement as amended and/or any of the other Loan Documents, are hereby
ratified and confirmed by the Company and Haggar, and all such agreements shall
be and shall remain in full force and effect, enforceable in accordance with
their terms.
8. NO CLAIMS OR DEFENSES. Each of the Company and Haggar, by the execution
of this Agreement, hereby declares that it has no offsets, claims,
counterclaims, defenses or other causes of action against the Agent or the Banks
related to any Loan, the Credit Agreement as amended, any of the other Loan
Documents or the modification of the Credit Agreement pursuant to this
Agreement.
9. AUTHORITY. Each of the Company and Haggar represents and warrants that
all requisite corporate action necessary for it to enter into this Agreement has
been taken.
10. BINDING AGREEMENT. This Agreement shall be binding upon, and shall
inure to the benefit of, each party hereto and such party's legal
representatives, successors and assigns.
11. ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT AND THE LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES HERETO AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS AMONG THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
AMONG THE PARTIES HERETO.
FIFTH AMENDMENT TO CREDIT AGREEMENT PAGE 3
12. CHOICE OF LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF TEXAS, BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
13. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Agreement by signing any such
counterpart.
EXECUTED as of the date first above written.
HAGGAR CLOTHING CO., a Nevada
corporation, f/k/a Haggar Apparel
Company
By: /s/ J. M. HAGGAR, III
--------------------------------------
J. M. Haggar, III
Chairman/Chief Executive Officer
HAGGAR CORP., a Nevada corporation
By: /s/ J. M. HAGGAR, III
-----------------------------------
J. M. Haggar, III
Chairman/Chief Executive Officer
TEXAS COMMERCE BANK National
Association, successor by merger to
Texas Commerce Bank, National
Association, Individually, as the
Agent and as Funds Administrator
By: /s/ JOHN P. DEAN
-----------------------------------
John P. Dean
Senior Vice President
NATIONSBANK OF TEXAS, N.A.
By: /s/ SHARON M. ELLIS
-----------------------------------
Sharon M. Ellis
Vice President
FIFTH AMENDMENT TO CREDIT AGREEMENT PAGE 4
COMERICA BANK -- TEXAS
By: /s/ MELINDA A. CHAUSSE
-----------------------------------
Melinda A. Chausse
Vice President
NBD BANK, N.A.
By: /s/ JAMES D. HEINZ
-----------------------------------
James D. Heinz
Vice President
THE BANK OF TOKYO, LTD., DALLAS AGENCY
By: /s/ JOHN M. MEARNS
-----------------------------------
John M. Mearns
Vice President/Manager
BANK OF SCOTLAND
By: /s/ CATHERINE M. ONIFFREY
-----------------------------------
Catherine M. Oniffrey
Vice President
NATIONAL CITY BANK, KENTUCKY
f/k/a First National Bank of
Louisville
By: /s/ DONALD R. PULLEN, JR.
-----------------------------------
Donald R. Pullen, Jr.
Vice President
FIFTH AMENDMENT TO CREDIT AGREEMENT PAGE 5
CONSENT OF HAGGAR
Haggar hereby (a) acknowledges its consent to this Agreement, (b) ratifies
and confirms all terms and provisions of the Parent Guaranty, (c) agrees that
the Parent Guaranty is and shall remain in full force and effect, (d)
acknowledges that there are no claims or offsets against, or defenses or
counterclaims to, the terms and provisions of and the obligations created and
evidenced by the Parent Guaranty, (e) reaffirms all agreements and obligations
under the Parent Guaranty with respect to the Loans, the Notes, the Credit
Agreement as amended and all other documents, instruments or agreements
governing, securing or pertaining to the Loans, as the same may be modified by
this Agreement, and (f) represents and warrants that all requisite corporate
action necessary for it to execute this Agreement has been taken.
HAGGAR CORP.,
a Nevada corporation
By: /s/ J.M. HAGGAR, III
-----------------------------------
J.M. Haggar, III
Chairman/Chief Executive Officer
FIFTH AMENDMENT TO CREDIT AGREEMENT PAGE 6
CONSENT OF DOMESTIC SUBSIDIARIES
Each of the undersigned Subsidiaries hereby (a) acknowledges its consent to
this Agreement, (b) ratifies and confirms all terms and provisions of the
Subsidiary Guaranty to which it is a signatory, (c) agrees that the Subsidiary
Guaranty to which it is a signatory is and shall remain in full force and
effect, (d) acknowledges that there are no claims or offsets against, or
defenses or counterclaims to, the terms and provisions of and the obligations
created and evidenced by the Subsidiary Guaranty to which it is a signatory, (e)
reaffirms all agreements and obligations under the Subsidiary Guaranty to which
it is a signatory with respect to the Loans, the Notes, the Credit Agreement as
amended and all other documents, instruments or agreements governing, securing
or pertaining to the Loans, as the same may be modified by this Agreement, and
(f) represents and warrants that all requisite corporate action necessary for it
to execute this Agreement has been taken.
BOWIE MANUFACTURING COMPANY,
a Nevada corporation
By: /s/ J.M. HAGGAR, III
-----------------------------------
J.M. Haggar, III
Chairman/Chief Executive Officer
CORSICANA COMPANY,
a Nevada corporation
By: /s/ J.M. HAGGAR, III
-----------------------------------
J.M. Haggar, III
Chairman/Chief Executive Officer
DALLAS PANT MANUFACTURING COMPANY,
a Nevada corporation
By: /s/ J.M. HAGGAR, III
-----------------------------------
J.M. Haggar, III
Chairman/Chief Executive Officer
FIFTH AMENDMENT TO CREDIT AGREEMENT PAGE 7
GREENVILLE PANT MANUFACTURING
COMPANY, a Nevada corporation
By: /s/ J.M. HAGGAR, III
-----------------------------------
J.M. Haggar, III
Chairman/Chief Executive Officer
MCKINNEY PANT MANUFACTURING
COMPANY, a Nevada corporation
By: /s/ J.M. HAGGAR, III
-----------------------------------
J.M. Haggar, III
Chairman/Chief Executive Officer
OLNEY MANUFACTURING COMPANY,
a Nevada corporation
By: /s/ J.M. HAGGAR, III
-----------------------------------
J.M. Haggar, III
Chairman/Chief Executive Officer
WAXAHACHIE GARMENT COMPANY,
a Nevada corporation
By: /s/ J.M. HAGGAR, III
-----------------------------------
J.M. Haggar, III
Chairman/Chief Executive Officer
FIFTH AMENDMENT TO CREDIT AGREEMENT PAGE 8
LA ROMANA MANUFACTURING CORPORATION,
a Nevada corporation
By: /s/ J.M. HAGGAR, III
-----------------------------------
J.M. Haggar, III
Chairman/Chief Executive Officer
HAGGAR SERVICES, INC.,
a Texas corporation
By: /s/ J.M. HAGGAR, III
-----------------------------------
J.M. Haggar, III
Chairman/Chief Executive Officer
AIRHAGGAR, INC., f/k/a HAGAIR, INC.,
a Texas corporation
By: /s/ J.M. HAGGAR, III
-----------------------------------
J.M. Haggar, III
Chairman/Chief Executive Officer
DUNCAN MANUFACTURING COMPANY,
an Oklahoma corporation
By: /s/ J.M. HAGGAR, III
-----------------------------------
J.M. Haggar, III
Chairman/Chief Executive Officer
FIFTH AMENDMENT TO CREDIT AGREEMENT PAGE 9
WESLACO CUTTING, INC.,
a Nevada corporation
By: /s/ J.M. HAGGAR, III
-----------------------------------
J.M. Haggar, III
Chairman/Chief Executive Officer
WESLACO SEWING, INC.,
a Nevada corporation
By: /s/ J.M. HAGGAR, III
-----------------------------------
J.M. Haggar, III
Chairman/Chief Executive Officer
HAGGAR DIRECT, INC.,
a Nevada corporation
By: /s/ J.M. HAGGAR, III
-----------------------------------
J.M. Haggar, III
Chairman/Chief Executive Officer
FIFTH AMENDMENT TO CREDIT AGREEMENT PAGE 10